Bombay High Court Adjudicates Challenge to MMRDA's Additional Premium Demand — Interpretation of Articles 2(c), 2(d), 2(e) of Lease Deed and Impact of Supplementary Lease Deed. The Court Examines Whether Delay in Construction Attributable to MMRDA's Approvals and Absence of Time Limit for Additional Built-Up Area Renders Demand Arbitrary.

Case Note & Summary

The dispute arose from a demand notice issued by the Mumbai Metropolitan Region Development Authority (MMRDA) to the Indian Newspaper Society (the petitioner) for additional premium/penalty due to alleged late completion of construction on a leased plot at Bandra-Kurla Complex, Mumbai. The petitioner, a non-profit company registered under Section 25 of the Companies Act, 1956, was allotted Plot No. C-63 in 'G' Block, BKC, on 17 November 2005, on an 80-year lease for constructing an office complex, with a lease premium of Rs. 88,52,75,000. A Lease Deed was executed on 9 April 2008, stipulating under Article 2(d) that construction must be completed within four years. Article 2(e) allowed extension of time on payment of additional premium at progressive rates. Possession was handed over on 10 April 2008. The original permissible built-up area (BUA) was 20,830 sq. mtrs. at 2.00 FSI. The petitioner submitted construction plans and obtained excavation permission on 30 May 2008. However, plan approval was delayed, partly due to requirements for environmental NOC, which was submitted on 8 October 2009. Meanwhile, MMRDA enhanced FSI to 4.00 and offered additional BUA. On 22 September 2009, the petitioner applied for additional BUA of 20,830 sq. mtrs., which was allotted on 10 September 2009 against additional premium of Rs. 204,02,98,500, payable in instalments. A Supplementary Lease Deed was executed on 22 April 2013, which stated that there would be no time limit for completing construction using the additional BUA, and the incremental premises would be integral to the original demised premises. The total BUA thus increased to 41,660 sq. mtrs. The petitioner submitted a revised plan for G+14 floors in both wings, which was approved on 26 August 2011. Commencement Certificates (CC) were issued piecemeal, with the final CC for the entire building granted only on 14 November 2013. In the meantime, the four-year period under the original Lease Deed had expired. The petitioner, anticipating the need for extension, wrote on 6 June 2012 and 10 December 2012 seeking two years' extension, citing delays including height clearance from aviation authorities, which was eventually obtained on 2 August 2012. By a letter dated 10 January 2013, the petitioner estimated completion would take six years and requested payment of additional premium in instalments under protest. MMRDA proposed to levy penalty. Despite disagreement, the petitioner, to avoid project delay, offered to pay the additional premium in quarterly instalments under protest. On 30 September 2013, MMRDA granted extension for one year from 9 April 2012 to 8 April 2013, charging additional premium at 10% of lease premium (Rs. 8,85,27,500) plus 14% interest for delayed payment, and agreed to instalment payment. Subsequently, the petitioner challenged a demand notice dated 12 September 2017, contending that the demand was contrary to lease terms, especially since delay was partly due to MMRDA's own delays in approvals and the Supplementary Lease Deed had removed time limits for additional BUA. The writ petition was filed in 2018. The Bombay High Court issued Rule and by consent heard the matter finally, reserving judgment on 22 January 2026 and pronouncing it on 8 April 2026. The available judgment text contains only the factual background up to paragraph 22; the court's analysis, reasoning, and final decision are not included in the provided excerpt.

Issue of Consideration